Title
(CONTINUED FROM NOV. 18, 2020) - Light Rail Small Business Financial Assistance Program Pilot (Ordinance S-47126)
Description
Request to authorize the City Manager, or his designee, to implement a proposed Light Rail Small Business Financial Assistance Program (SBFAP) Pilot working with Valley Metro and to enter into a grant, and other agreements as necessary, for the Phoenix Community Development and Investment Corp (PCDIC) to supplement the SBFAP Pilot with $500,000 in grant funding. Further request to authorize the City Treasurer to receive, and the City Controller to disburse, all funds related to this item.
Report
Summary
The South Central Extension/Downtown Hub (SCE/DH) and Northwest Extension Phase II (NWEII) projects are both currently under construction, which combined will expand the light rail system in the City by nearly eight miles.
Early-action business assistance within the SCE/DH corridor began in May 2018 through a Federal Transit Administration (FTA) Transit Oriented Development (TOD) Grant. Using funding from the SCE/DH TOD Grant, the City and Valley Metro worked with a consulting team to complete an inventory of more than 472 businesses along the SCE/DH corridor (from Van Buren Street to South Mountain Avenue, between 3rd Street and 3rd Avenue).
Currently, the City works with Valley Metro to provide a comprehensive business assistance program, utilizing individual business assessments, best practices, and work plans that address the unique needs of the affected businesses. The current business assistance program provides technical assistance to provide guidance and support in areas such as marketing and advertising programs and strategies, financial accounting and bookkeeping, website and e-commerce development and deployment, human resources, diversification of revenue streams, and other assistance that could improve business efficiencies.
The SBFAP Pilot would add a new element to light rail business assistance by providing financial assistance to help offset economic impacts to locally-owned small and micro businesses determined to have been directly impacted by construction along the SCE/DH and NWEII light rail extension corridors. This Pilot is proposed as a one-year program, but if successful and sustainable, could be extended for the duration of construction of both projects. This Pilot is intended only to apply to light rail projects with construction of three years or more with impacts to businesses located directly along, or accessed directly from, the alignment. The Pilot's aim is to help mitigate financial impacts and support the business retention of directly affected small and micro businesses. The Pilot would have a two-tiered approach, as outlined further in this report.
Several factors went into the creation of the proposed SBFAP Pilot, including but not limited to:
- Feedback and input received from impacted local business owners;
- Feedback from Phoenix business owners impacted by previous light rail projects;
- The unique nature and duration of construction for light rail projects and their impact on businesses directly located along the affected corridor;
- Research of business assistance programs for similar transportation projects in other cities;
- Recommendations from the TOD Business Assistance Grant Consultants;
- Staffing levels;
- Legal requirements/considerations; and
- Availability of funds.
This Pilot will be assessed to evaluate participation levels, funding availability, effectiveness, and other considerations.
Funding
Tier I
The first tier of financial assistance would offer $1,000 in financial assistance to offset operational costs for small and micro businesses that meet the eligibility criteria, as outlined further in this report. If the SBFAP Pilot is approved to continue after the first year, the amount would be available annually for the duration of construction impacts to the businesses. Tier I does not require businesses to be able to provide detailed financial records demonstrating lost business revenue due to construction impacts. Due to the lower amount of less-restrictive funding currently available, Tier I provides a lower level of financial assistance. However, if additional funding resources, such as grants or donations, become available to help fund this program, those funding resources would increase the amount available to businesses and potentially raise the level of Tier I financial assistance.
Tier II
The second tier of financial assistance would offer up to $5,000 in financial assistance to offset operational costs for small and micro businesses that meet the eligibility criteria, as outlined further in this report. If the SBFAP Pilot is approved to continue after the first year, the amount would be available annually for the duration of construction impacts to the businesses. The amount awarded under Tier II will be based on the business' revenue reduction up to the maximum. Tier II funding includes the use of T2050 funds currently allocated for light rail business assistance. Although a higher assistance amount is available through Tier II, these funds have more stringent legal requirements, which is why a review of financial records is necessary for businesses to access these funds.
Eligible business expenses for the SBFAP Pilot funds under both Tiers I and II will be specifically for the business’ operational costs, including: (1) utilities; (2) rent or mortgage payments; (3) insurance; and (4) other types of documented business-related operational expenses, which may be requested and considered. Local, state, and federal taxes are not eligible operating expenses for purposes of the Pilot's assistance.
In addition to the financial assistance provided by the SBFAP Pilot, businesses will continue to be eligible to receive technical assistance for guidance and support in areas such as financial accounting/bookkeeping, marketing and advertising programs and strategies, website and e-commerce development and deployment, human resources, diversification of revenue stream, and other assistance that could improve business efficiencies.
Eligibility
Businesses seeking financial assistance grants will be required to apply to the SBFAP. To receive a financial assistance grant, a business must meet the following eligibility criteria.
Tier I
- Affected business location must be physically located on, or directly accessed from: (1) Central Avenue, between Jefferson Street and Baseline Road (for SCE/DH); (2) Dunlap Avenue, between 19th and 25th Avenues (for NWEII); (3) 25th Avenue, between Dunlap Avenue and Mountain View Road (for NWEII); (4) Mountain View Road, from 25th Avenue to the former Metrocenter Mall property (for NWEII); or (5) the Metrocenter Mall property, as eligible businesses in the former Metrocenter Mall property are also within the program boundaries (for NWEII);
- Be a locally-owned business with 15 or fewer employees and $500,000 or less in annual revenue for the overall business;
- Be currently open and operational on the affected light rail construction alignment with posted hours of operation, as well as open and operational for at least 24 months prior to: (1) June 19, 2020 (for SCE/DH); and July 28, 2020 (for NWEII);
- Conduct business directly with consumers where transactions primarily take place at the location on the affected construction alignment;
- Be able to provide all necessary documents to verify program eligibility;
- Be in good standing with all local, state, and federal taxing and licensing authorities; and
- Sign a waiver releasing the City, Valley Metro, and any contractors selected to run the SBFAP Pilot from any claims related to revenue impacts arising out of light rail planning, design, and construction activities in order to receive this Pilot's funding support.
Tier II
- Meet all the requirements of Tier I; and
- Demonstrate, via financial business records, a loss in revenue after the commencement of construction and related activities in comparison with the same period in the year prior to the start of construction.
Staff estimates there are approximately 145 businesses in the SCE/DH corridor and about 60 businesses in the NWEII corridors that may be eligible under this program.
Ineligible Businesses
Businesses that would not be eligible include: residential property(ies); places of worship; schools; banks; hotels; government agencies; utility companies; businesses generating over 60 percent of revenues from the sale of alcoholic beverages; businesses generating revenues from the sale of marijuana; sexually oriented businesses or topless bars (as defined in the Phoenix City Code); and unoccupied buildings.
Program Administration
Valley Metro will implement program operation in conjunction with a Program Administrator. The Program Administrator will be responsible for reviewing applications, determining and monitoring eligibility, processing payments, providing overall customer service to businesses interested in the SBFAP, as well as thorough program documentation and regular financial and programmatic reporting. The City will ensure that regular audits of the SBFAP are conducted by the City Auditor and/or Valley Metro Auditor.
Financial Impact
The Phoenix Community Development and Investment Corporation (PCDIC) recently awarded a $500,000 grant to assist with funding the SBFAP Pilot. Combined with $1.86 million of T2050 funds currently allocated and available for light rail business assistance, the total budget currently available for distribution to businesses, including program administration, is approximately $2.36 million. Efforts are also underway to seek additional financial support from various community, private, and philanthropic organizations. Funding is available in the Public Transit Capital Improvement Program.
Concurrence/Previous Council Action
The Citizens Transportation Commission approved this item on Oct. 22, 2020, by a vote of 11-0.
The Transportation, Infrastructure and Innovation Subcommittee recommended this item for approval on Nov. 4, 2020, by a vote of 4-0.
Location
The Northwest Extension Phase II will run along Dunlap Avenue to 25th Avenue, then north to Mountain View Road, and then west across Interstate 17, via an elevated structure over the freeway, to its terminus adjacent to Metrocenter Mall.
Council Districts: 1, 3 and 5
The South Central Extension Downtown Hub will run along Central Avenue, from Jefferson Street to Baseline Road.
Council Districts: 7 and 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Public Transit Department.